Govt sticks to utilisation policy

The government has stuck to its gas utilisation policy in its affidavit filed in the Supreme Court with regard to Reliance Industries Ltd (RIL)-Reliance Natural Resources Ltd (RNRL) gas dispute.

In a strongly worded affidavit, the government said RIL and RNRL cannot settle between themselves as to how the gas — which is a national asset and a natural resource, which vests in the government of India and which is to be utilised for the welfare of the nation — is to be distributed.

“It is not the private property of RIL and RNRL and any understanding arrived at between them is not binding upon the government,” it added.

Dismissing the argument raised by RNRL that it is entitled to a particular quantity of gas, it said it was for the government to determine as to who was entitled to the gas in terms of the gas utilisation policy, which seeks to make available natural gas to crucial infrastructure sectors where assets have been created and are lying under-utilised. The government has outlined its priorities for supply of gas and this cannot be held subject to a family arrangement between the two parties, it said.

“As long as there is a shortage of natural gas in the country, it is the regulatory right of the government to allocate gas, keeping in view the public interest,” the affidavit added. In its prayer, government has pleaded to “...stay and set aside the operation of the final judgment of the High Court.” The government’s stand will play a crucial role, though RIL today filed an application asking the court to make the government a respondent in the case.

A senior official at the ministry of petroleum and natural gas said that it has maintained a stand similar to what it took when the case was being heard at the Bombay High Court. Moreover, the fertiliser and power ministries too have expressed concern over the gas supply following the June 15 judgment of the Bombay High Court. “The fertiliser companies have entered into a five-year agreement with RIL. At least, it should be protected for five years,” Fertiliser Secretary Atul Chaturvedi said.

On Thursday, GVK Industries-owned Gautami Power filed an application in the apex court, seeking to intervene in the case. Gautami Power has signed a gas purchase contract of 1.8 million metric standard cubic metres a day (mmscmd) with RIL. Under the gas utilisation policy, the government allocated gas from RIL’s KG-D6 block to fertiliser, power and steel sectors. Accordingly, RIL signed gas sales and purchase agreements for a five-year period with fertiliser companies, power generators and steel companies at a price of $4.2 per million British thermal unit (mBtu), as fixed by the government.

RIL, which filed its reply on the RNRL petition in the SC today, has also sought an interim relief, claiming that the HC judgment is in “...violation of the extant gas utilisation policy of the Government of India”.

The judgment would lead to an interruption of supply of gas to vital sectors like fertiliser and power without any justification since the Respondents (RNRL or any of its affiliates) have no ability to use any gas for generation of power, RIL said. It has also quoted Article 297 of the Constitution, which stipulates that government is the owner of all natural resources of the country.